Can PayPal compete against Apple, Google, Android and other mobile commerce platforms?
The online and wireless payment space is growing, changing and maturing and that is threatening existing leaders like PayPal. How will new competition from entrants like Apple Pay, Google Wallet, Android Pay, Google Pay, Samsung LoopPay, CurrentC, Square, Stripe and many others change this aspect of mobile, and how will PayPal defend it’s position?
As an industry analyst, I will follow this evolving and exciting e-pay and digital wallet space. If we pull the camera back and look at it from a longer-term, historical perspective, we see that wireless is a growing and important part of this whole picture.
Dan Schulman is taking over as the PayPal chief executive as it breaks away from eBay at a time of great challenge and opportunity for the company. PayPal started in 1998 as an online venture, but is now expanding to wireless with smartphones. That’s great, but so are many other digital wallets, and many of them have big brand names.
While the online payment space is only a couple decades old, it has gone through enormous change and pressure during that time. However, through it all, PayPal has always been a leader in the space.
But the challenge and opportunity today is greater than ever. It is changing and new competitors are threatening to rewrite the rules and the leadership just like they have done in the past.
An example: Remember when BlackBerry and Nokia were wireless handset leaders just eight years ago? At that time no one would have thought they could have quickly dropped off the face of the leadership charts. However, Apple iPhone and Google Android changed the space virtually overnight. Today they lead as the first two struggle.
That is the same threat and opportunity PayPal faces. Today PayPal is strong. However, the space is rapidly changing with lots of big, brand-name companies trying to be the new king of the hill. They have lots of new ideas and new tech and the race has begun.
PayPal Challenge
If PayPal continues down the same path without making changes, I believe the growth wave will quickly pass them by. In fact, even if PayPal makes just moderate changes, the growth wave may still pass them by if others are more innovative and attractive.
To hang on to the leadership position, PayPal needs to reinvent itself and the entire space in an effort to remain growing and important. It must grasp new opportunities and deal with challenges. It must refresh and expand its brand, its technology and its relationships with customers and merchants. It must keep doing what it now does and keep expanding and transforming itself and the larger space.
This can be done, and it will be interesting to watch it develop over the next few quarters. This is the challenge and opportunity PayPal faces going forward. The entire space is ready to be quickly transformed, but which company will do it is the question. Several successful brand-name competitors are getting ready to do just that.
Several of the new competitors also manufacture hot smartphones like the Apple iPhone, Samsung Galaxy and more. Other competitors are not wireless handsetmakers, but financial institutions, with new ideas.
With all these competitors, PayPal must prepare for anything. Bottom line, there is a threat from heavy hitter big names entering and threatening to rewrite the entire online and wireless payment space. They are in a take-no-prisoners war to reshape the entire industry, and to lead.
There are so many questions: Will customers use several mobile wallets or just one? Will stores gear up to take payments from multiple players or just a few? Will one company really catch on early and quickly transform the space or will this be a more gradual shift from the old to the new?
These are just some of the questions we are asking right now. One big question is how will PayPal transform itself and the industry? And will it still be the leader five years from now?
That’s the challenge and the opportunity PayPal and every challenger faces. This space will continue to grow, and there are no guarantees of success with any of the new players. However, they do have strong brand names and the media loves to write about all their innovations. Plus they have every intention of transforming the space.
I believe this space will go through significant changes pretty quickly over the next few years. During that time of confusion, media attention is key. Users have to understand the changing space and all the competitors.
One problem is PayPal does not seem to get the same level of media attention, and that could be a weak link the company needs to strengthen, but it can be done. Just look at T-Mobile US over the last two years as an example. It has grown dramatically in recent years from nothing. Will PayPal do the same?
The mobile money segment is going to get a whole lot noisier going forward. New entrants and innovative ideas are going to transform the space. The leadership and change will be very interesting to follow.
But who will lead? I will be following and writing about this exciting new area and look forward to keeping you updated on what I learn. Buckle up, because this is going to be one heck of a horse race.
RCR Wireless News columnist Jeff Kagan is a wireless analyst and consultant. Kagan shares his colorful perspectives and opinions on the companies and technologies that are transforming the industry he has followed for more than 25 years. E-mail him at jeff@jeffKAGAN.com.
